Big news for retail investors and market watchers! JM Financial has initiated coverage on readymade apparel retailer IPO stock listed last year. JM Financial provides a BUY rating and suggests a target price of INR 400 per share which means an upside of 74% from current levels. This is on the back of strong operational metrics, aggressive expansion plans and a strong play in value fashion retail space.
The IPO stock in the discussion is Bazaar Style Retail which made its debut in 2024. Let’s dig deeper into what JM Financial sees.
Baazar Style Overview, IPO Details
Baazar Style Retail was founded in June 2013 and has quickly become a leader in value fashion retail, primarily catering to the eastern belt of India. As of December 2024, the company has 199 stores spread across 1.8 million square feet in 170 cities. More than 75% of its stores are in Tier 2, Tier 3 and Tier 4 towns where the brand can tap into India’s value-conscious, aspirational consumer base.
Baazar Style Retail launched its IPO on 30 August 2024, the issue size was INR 686.67 crore. The IPO was oversubscribed to 40.6X. However, listing performance was lacklustre, stock was listed with a 2.83% gain. On 18 February 2025, Bazaar Style shares reached their lowest level of INR 183.10 per share, reflecting a ~53% decline from its allotment price of INR 389 per share.
However, it has recovered 32.6% from its lowest level and trading at around INR 242 per share.
Growth Projections and Financials
JM Financial has projected Baazar Style’s Revenue/EBITDA/PAT to grow at 30%, 36% and 50% CAGR over FY24-27E respectively. The company’s ROE and ROIC are also expected to improve from 14% and 11% in FY24 to 22% and 19% by FY27.
This growth and profitability improvement is due to improving store-level economics, operational efficiencies and working capital management. EPS is expected to grow 32% in FY25 to INR 5.4. Reported numbers may look subdued due to higher depreciation and lease liability interest on account of accelerated store additions and lease buyouts, but the underlying growth story is strong.
Expansion Plans: 145 new stores by FY27
Baazar Style’s expansion plans are a big growth lever. JM Financial estimates the company can add at least 265 stores with strong unit economics and growing demand in underpenetrated markets. The company is already planning to add 145 new stores over FY25-27E which is a sign of confidence in scaling up operations.
The value apparel market stood at INR 3.7 lakh crore in FY24, with the organised segment at INR 1.3 lakh crore. This organised market is projected to grow at a 17% CAGR to INR 2.1 lakh crore by FY27, driven by rising demand for affordable, quality branded products. The eastern region is expected to outpace others with ~15% CAGR.
The retailer’s repeat sales rate exceeding 68% is a testament to its deep understanding of consumer preferences and commitment to quality.
Valuations at a Discount
Baazar Style currently trades at a significant discount to peers, with the stock valued at ~10x FY27 EV/EBITDA and ~17x FY27 EPS (Pre-Ind AS 116). This represents a discount of 40-70% and 20-65% on EV/EBITDA and P/E multiples respectively, positioning the stock as an attractive value pick for long-term investors.
Key Risks to Watch Out
Despite the positives, JM Financial has flagged some risks to watch out for. High revenue concentration from core markets (80-90%), dependence on apparel sales, intense competition in value retail, private label launches not taking off as expected, and dependence on a limited supplier base without definitive agreements.
Conclusion
Baazar Style Retail has a solid foundation, strong growth and execution, making it a good investment opportunity. The stock has already rallied 21% in March after months of decline and JM Financial initiating with a target price of INR 400 only adds to the positivity.
As execution and market expansion continue to play out, Baazar Style Retail is poised for a re-rating, and you can ride the value retail story of India.
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